(1) IvanhoeCorp. currently has a WACC of20percent. If the cost of debt capital for the firm is12percent and the firm is currently financed with20percent debt, then what is the current cost of equity capital for the firm? Assume that the assumptions in Modigliani and Miller's Proposition 1 hold.(Round answer to 2 decimal places, e.g. 17.54%.)

Current cost of equity capitalenter the current cost of equity capital in percentages rounded to 2 decimal places jQuery22407452112440142364_1628923241270?%

(2) You are valuing a company using the WACC approach and have estimated that the free cash flows from the firm (FCFF) in the next five years will be $36.6, $40.1, $43.1, $47.2, and $47.5million, respectively. Beginning in year 6, you expect the cash flows to decrease at a rate of3percent per year for the indefinite future. You estimate that the appropriate WACC to use in discounting these cash flows is9percent. What is the value of this company?(Round answer to 2 decimal places, e.g. 52.75.)

Value of company

$??? enter the value of the company in millions of dollars rounded to 2 decimal places

million

(3) You want to estimate the value of a local advertising firm. The earnings of the firm are expected to be $2million next year. Based on expected earnings next year, the average price-to-earnings ratio of similar firms in the same industry is51. Therefore, you estimate the value of the firm you are valuing to be $102million.

Further investigation shows that a large portion of the firm's business is obtained through connections that John Smith, a senior partner of the firm, has with various advertising executives at customer firms. Mr. Smith only recently started working with his junior partners to establish similar relationships with these customers.

Mr. Smith is approaching 65 years of age and might announce his retirement at the next board meeting. If he does retire, revenues will drop significantly and earnings are estimated to shrink by35percent. You estimate that the probability that Mr. Smith will retire this year is50percent. If he does not retire this year, you expect that Mr. Smith will have sufficient time to work with his junior partners so his departure will not affect earnings when he departs. How does this information affect your estimate of the value of the firm?(Round answer to 2 decimal places, e.g. 52.75.)

Value of the firmenter the value of the firm in millions of dollars rounded to 2 decimal places

???million

(4) You have the following information for a company you are valuing and for a comparable company:

Comparable company:Company you are valuing:Stock price = $23.30Value of debt = $3.74millionNumber of shares outstanding =6.79millionEst. EBITDA next year = $5.00millionValue of debt = $18.75millionEst. income next year = $1.70millionEst. EBITDA next year = $17.50millionEst. income next year = $5.30million

Estimate the enterprise value of the company you are evaluating using the P/E and enterprise value/EBITDA multiples.(Round intermediate calculation and final answer to 2 decimal places, e.g. 15.25.)

Enterprise value of the companyenter the enterprise value of the company in millions of dollars rounded to 2 decimal places ??? million

(5) You have started a business that sells a home gardening system that allows people to grow vegetables on their kitchen countertop. You are considering two options for marketing your product. The first is to advertise on local TV. The second is to distribute flyers in the local community. The TV option, which costs $50,000annually, will promote the product more effectively demand for1,200units per year. The flyer advertisement option costs only $10,000annually but will not demand for only280units per year. The price per unit of the indoor gardening system is $100, and the variable cost is $75per unit. Assume that the production capacity is not limited and that the marketing cost is the only fixed cost involved in your business.

What are the break-even points for both marketing options?

The break-even point for TV advertisement is

enter a number of units for the break-even point for ???

units.The break-even point forflyer optionis

enter a number of units for the break-even point forflyer ???

units.

Which one should you choose?

(6) Carla VistaCorporation is a private company that had EBIT of $216million and depreciation and amortization of $26million in the most recent fiscal year. At the end of that year, a similar, public firm has an Enterprise Value/EBITDA multiple of5.0. What is the implied enterprise value ofCarla Vista?(Round answer to 2 decimal places, e.g. 52.27.)

Enterprise value ofCarla Vista

$

enter the enterprise value of the company in millions of dollars rounded to 2 decimal places ???million

(7) SheridanMotors is a chain of used car dealerships that has publicly traded stock. Using the adjusted book value approach, you have estimated the value ofSheridanMotors to be $43,450,000. The company has $35.5million of debt outstanding. Its stock price is $6.2per share, and there are1,680,000shares outstanding. What is the going concern value ofSheridanMotors?

The going concern value ofSheridanMotors is $ ???

enter the going concern value of the company in dollars.